The Cummings & Cummings Law Journal

What Is Form 5471 and Why It Matters More Than Most Owners Realize Form 5471 is an expansive information return required of certain U.S. persons who are officers, directors, or shareholders of specified foreign corporations, including controlled foreign corporations (CFCs). The filing obligation is triggered by detailed ownership tests and events, such as acquiring or

Why Tax-Efficient Funding of a Buy-Sell Agreement Is Mission-Critical Business owners often appreciate the conceptual value of a buy-sell agreement, but underestimate the tax and cash flow consequences of how the agreement is funded. A buy-sell agreement that is not matched to a capital source will either fail at the moment of truth or will

Federal Versus State Oversight: Who Regulates What At the most basic level, municipal bonds sit at the intersection of federal securities regulation and state public finance law. The federal framework, anchored by the Securities Exchange Act of 1934 and administered by the Securities and Exchange Commission (SEC), focuses on market integrity, disclosure, trading practices, and

What a Hybrid Mediation–Arbitration Clause Actually Does—and Why Precision Matters A hybrid dispute resolution clause that combines mediation and arbitration (often called “med-arb”) is designed to deliver a binding result efficiently while preserving an opportunity for negotiated resolution. Properly drafted, it can reduce cost and uncertainty by funneling parties through a structured path: consensual talks

Grasp the Global Patchwork of Data Protection Laws Before You Act The first step in international data protection compliance is acknowledging that there is no singular, harmonized standard that governs every jurisdiction. While the European Union’s General Data Protection Regulation (GDPR) is often treated as the benchmark, businesses that touch the United Kingdom, Brazil, Canada,

Understanding the ABC Test at a Glance The ABC test for worker classification is a statutory standard adopted in several states to determine whether a worker is an employee or an independent contractor. It is widely regarded as more rigorous than common law or multi-factor tests because it requires the hiring entity to establish all

Understanding the Purpose and Stakes of a Capital Call Default Provision A capital call default provision is the provision that governs what happens when an investor fails to fund a required capital contribution. In a private fund, this single clause interacts with the partnership agreement, subscription documents, side letters, financing arrangements, and tax allocations. Despite

Understand What Deferment of Business Income Really Means Deferring business income is not about avoiding tax; it is about shifting recognition of taxable income into a later tax year under rules that the Internal Revenue Code and Treasury Regulations expressly allow. The core objective is simple: align the timing of income recognition with your cash

Understanding Business Bad Debts Under Section 166 Business bad debts are amounts owed to a business that become wholly or partially uncollectible in the course of the taxpayer’s trade or business. Under Internal Revenue Code Section 166, a business may claim an ordinary deduction for these debts when they become worthless, provided that the debt

Understanding the Distinction: Principal Office, Registered Office, and Mailing Address Many organizations conflate “corporate address” with “registered office,” yet these are distinct legal concepts with different compliance obligations. The principal office generally denotes the location where executive management directs, controls, and coordinates the company’s activities. By contrast, the registered office is a legally designated address

Understand What Qualifies as a Deductible Business Meal Under federal tax law, a business may deduct a portion of certain meal costs when the expenditure is ordinary and necessary under Section 162, directly connected to the active conduct of trade or business, and properly substantiated. In practical terms, a deductible business meal generally involves a

Understanding U.S. Transfer Tax Exposure for Nonresident Aliens Nonresident aliens who invest in United States real estate are often surprised to learn that the United States imposes an estate tax on certain United States situs assets that they own at death. Unlike income tax rules, which hinge on whether income is effectively connected with a

What an IRS Private Letter Ruling Is and Why Tax Certainty Matters An Internal Revenue Service private letter ruling is a written statement by the Office of Chief Counsel that applies the tax laws to a specific set of facts presented by a taxpayer. It is prospective in orientation and provides binding assurance to the

Assess Whether a Series LLC Is the Right Fund Architecture A series limited liability company permits the creation of discrete “series” within a single umbrella entity, each with segregated assets, liabilities, classes of interests, and business purposes. For a hedge fund sponsor, this can offer a powerful way to run multiple strategies, investor sleeves, or

What Is a Business Trust and Why It Matters in Tax Planning A business trust, sometimes referred to as a statutory trust or a business organization in trust form, is a legal arrangement in which a trustee holds and manages property or an enterprise for beneficiaries pursuant to a governing instrument. While the term sounds

Why E‑Commerce Taxation Is Different From Traditional Retail E‑commerce businesses inhabit a complex tax environment that differs materially from brick‑and‑mortar operations. Remote selling models trigger multi‑jurisdictional exposure to sales and income taxes, even when a business has no physical footprint in a state or country. After the Supreme Court’s Wayfair decision, “economic nexus” rules—based on

Understand the Scope of Dodd-Frank Whistleblower Protections and Their Reach The Dodd-Frank Act established a robust whistleblower framework that, in finance, intersects with multiple regulatory regimes, including the Securities and Exchange Commission’s program under Exchange Act Section 21F and the Commodity Futures Trading Commission’s analogous protections. These protections encompass both financial incentives for reporting to

Defining Earned Income for Foreign Earned Income Exclusion Purposes The Foreign Earned Income Exclusion, codified in Section 911 of the Internal Revenue Code, allows qualifying taxpayers to exclude a portion of their foreign earned income from U.S. taxation. The earned income limitation is central: only income that is both “foreign” and “earned” can be excluded,

Understand the NACHA Ecosystem and Your Role in It Compliance begins with a precise understanding of who you are in the Automated Clearing House ecosystem and which obligations attach to that role. The core actors include the Originator (you or your client initiating entries), the Originating Depository Financial Institution (ODFI), the Receiving Depository Financial Institution

Understanding the Doctrine: Substance, Form, and Why Sequencing Matters The step transaction doctrine is a judicially created principle that treats a series of formally separate steps as a single integrated transaction when those steps are prearranged parts of a single plan. In practical terms, the doctrine is a tool courts and the Internal Revenue Service